INCREASED Chinese buying and orders from India and Italy lifted Australian wool prices at auctions this week.
The Australian Wool Exchange said the market recorded a solid increase for the second consecutive week, again driven by gains in the Merino fleece sector.
Last week’s rises encouraged more sellers to the market, pushing the national offering up to 43,688 bales.
“Although the better style types and wool with favourable additional measurement results attracted the strongest competition, all wool regardless of style or additional measurement results rose, as buyers fought to secure quantity in the rising market,” AWEX said.
“By the end of the series, the individual Micron Price Guides (MPGs) for Merino fleece had risen by between 18 and 59 cents.
“The skirtings tracked a similar path to the fleece, with all types and descriptions recording gains, as again buyers fought for market share,” AWEX said.
The AWEX Eastern Market Indicator rose by 19 cents for the auction series, closing the week at 1170 cents, a 1.7 percent rise.
However, AWEX said the overall market increase was tempered by the crossbred sector.
“The crossbred MPG movements ranged from unchanged to minus 25 cents.
“These losses prevented the EMI from posting a larger increase,” AWEX said.
AWEX said the EMI has risen for five consecutive selling days, adding 48 cents, an increase of 4.3pc.
“The overall market increase was recorded despite a strengthening Australian dollar.
“The AUD was 0.59 US cents higher than the close of last week,” AWEX said.
“This meant when viewed in US dollar terms the increase in the EMI was greater (in percentage terms).
“The EMI added US19 cents for the series, closing at US767 cents, an increase of 2.5pc.”
China, Italy and India step up buying – AWI
Australian Wool Innovation trade consultant Scott Carmody said the increased buying pressure from China initially activated the market into higher territory, but other global wool destinations have now entered into placing small orders as well.
“Italy and India have bumped up their auction activity slightly, which has subsequently caused their buy in levels to be lifted to the spot price, or above, to secure some pre-Christmas supply risk mitigation as well as price surety,” he said.
“The locally based traders and largest exporters led the buyers purchase lists this week, but the price gains came from the strength of indents in the market place competing against their forward commitments and strategic buying.
“As prices opened dearer, the offshore users lifted bid prices to match the rises giving encouragement to traders to eliminate the initial losses of lower priced contracts and recover that loss and perhaps gain on new sales,” Mr Carmody said.
“This is theoretical of course, but traders do flourish when demand is consistent and spot prices are available.”
Mr Carmody said the third largest of the Chinese top makers continues to overshadow the current buying of the usually dominant top two top makers.
“This has been the case for quite a few weeks now, as that company is somewhat of a uniform supply specialist to the local Chinese industries and state owned enterprises.
“A large percentage of recent government uniform orders has reportedly flowed to that factory,” he said.
Next week’s offering is again forecast to increase, as sellers continue to be encouraged to the market by the price rises. AWEX said 49,134 bales are currently expected to be offered in Melbourne, Fremantle and Sydney, that is a designated superfine sale, the last until the second half of the season in February 2024. If this quantity is reached it will be the largest sale since April.
There are just three weeks of auctions before the annual three week recess is taken over the Christmas and New Year period.
Click here to see the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.